Shares of Siemens declined 1.2% to €109.48 as of 12:28pm in Frankfurt, extending its drop this year to 5.8%. Photo: Reuters

London: The potential value of Siemens AG’s health-care unit in an initial public offering (IPO) is slipping based on early investor feedback, according to people with knowledge of the matter.

Buyers are indicating that the business should be valued in a range of about €26 billion ($32 billion) to €30 billion, the people said, asking not to be identified because the details aren’t public. Executives at Siemens Healthineers are still meeting investors to gauge their appetite ahead of disclosing later this week a price range for the equity offering, the people said, adding that no final decisions have been made on the valuation.

Siemens aims to raise as much as €10 billion by selling up to 25% of the health business in the first half of the year, people familiar with the matter had said earlier this year. The health-care unit could be valued at €30 billion to €40 billion, they said.

“We like what we see so far in the process,” a Siemens spokesman said, noting that there’s been “quite an interest in the Siemens Healthineers asset.”

Shares of the European engineering company declined 1.2% to €109.48 as of 12:28pm in Frankfurt, extending its drop this year to 5.8%.

The IPO, which could be the largest in Europe this year, comes on the heels of market volatility this month that temporarily dampened investor appetite. Siemens Healthineers is also betting on the success of its Atellica portfolio of lab equipment and products, launched in 2017. Some investors have found forecasts for its sales to be too optimistic and want to see more proof of its success before raising the business’s valuation, the people said.

Atellica is a new entrant in a market dominated by companies including Roche Holding AG and Abbott Laboratories.

“Siemens has closed the gap relative to the competition,” Morgan Stanley analyst Ben Uglow said in a note in January, commenting on its market share. “But we are not yet convinced it will allow the company to regain lost market share, as switching cost for reference labs and hospitals is material.”

Siemens Healthineers posted profit of €2.49 billion on revenue of €13.8 billion for the year ended 30 September, according to a November statement from the parent company. Bloomberg